Why Private Equity is Betting Big on Professional Services
By J. James O’Malley, Former Andersen National Director of Experience Recruiting, Jim is Managing Director at Kensington International Executive Search
One of the key reasons I joined Kensington International Executive Search late 2024 was the opportunity to focus on two industries I’m passionate about: Private Equity and Professional Services . Given the surge of PE investment in professional services firms, I thought I’d highlight some key trends shaping this dynamic and increasingly intertwined space.
- Strong Growth & Stability
Professional services firms offer a compelling investment thesis: predictable, recurring revenue, high margins, and resilience during economic cycles. Whether it’s tax, legal, strategy, or technology consulting, businesses continue to rely on trusted advisors—even during downturns. For PE investors seeking defensible business models with consistent cash flow, this is a sweet spot.
- Tech-Driven Transformation
Technology is a game-changer. PE firms are actively modernizing their portfolio companies with AI, automation, and cloud-based platforms. This isn’t just about cost-cutting—it’s about enabling scalability and innovation. For example, digitizing client engagement in a legacy tax advisory firm or implementing advanced data analytics in a healthcare consultancy can radically enhance value creation.
- The Power of Specialization
Niche matters. Boutique firms with specialized domain knowledge, whether in ESG advisory, cyber risk, legal ops, or digital transformation—are drawing strong interest. PE buyers are particularly keen on firms that punch above their weight in a defined vertical or geography. Deep expertise is defensible and difficult to replicate, creating real competitive moats.
- Value Creation in Action
The classic PE playbook—operational improvements, pricing strategy, bolt-on acquisitions, geographic expansion—is alive and well in this sector. What’s evolved is the timeline: firms are seeking quicker value capture through targeted initiatives within the first 12–18 months post-acquisition. Cultural alignment and leadership quality have become just as critical as financial engineering.
- Navigating Regulatory Complexity
This is not a “plug-and-play” sector. Professional services come with ownership restrictions, compliance frameworks, and reputational risk—especially in areas like audit, legal, and healthcare. PE firms must tread carefully, understanding not just the financials but also the professional obligations and codes of conduct that govern client relationships.
As former colleagues who lived through transformation, client-first cultures, and high standards at Arthur Andersen, many of you have firsthand experience navigating these dynamics. PE’s growing footprint in professional services is unlocking exciting potential—but execution, leadership, and talent remain the true differentiators. If you’re expanding a professional services portfolio, advising a PE-backed firm, or thinking about leadership talent in this space, I’d welcome a conversation.
J. James O’Malley is a managing director at Kensington International Executive Search. For 30+ years, Jim has developed talent acquisition solutions to ensure that leadership talent aligns with changing business needs. Jim has served: Private Equity and their portfolio clients across all industries in addition to his background with Management Consulting firms, Architecture, Engineering, Accounting, Tax and Law firms in addition to IT, Healthcare, Operations and Supply Chain consultancies. He also helps large Commercial, Consumer and Private Banks with their hiring needs. For more information and to contact Jim at: Jomalley@ki-search.com